Wesley Davis

Comments:

• I have very much been a Boglehead for the last 20 years even though my S&P 500 index fund took a 37% hit in 2008. I rode out the market correction. It's a financial philosophy that has served me well. Yes, Apple has defied expectations year after year. Though it might appear impolite to say so, Apple's stellar performance has less to do with their fine design and more to do with the cheap coal (cheap manufacturing energy) and cheap labor of China where much of their hardware products are contract manufactured. That arrangement appears to be at an end. And there's always an example to heed about pulling out of the market too early and losing some upside to the stock market. But I would argue the current scenario is much different than 2008. The huge national debt means the Federal Reserve has less ability to intervene like it did in 2008. It's not even clear that The Fed will be able to get inflation under control because rising interest rates on Treasury bonds may mean the "taper" will translate to less income to the federal government to meet its ongoing obligations. The Fed might have taper its taper plans and let inflation run for a while. The Shiller P/E Ratio is at a historical high. Is this the same kind of irrational exuberance of the dot-com bubble? I have been telling anyone who will listen for the last year and a half that a "market correction" is imminent. So, I've been wrong for the last year and a half. In that period I switched to an indexed fixed income fund and lost in comparison to the S&P 500 index fund. Now I'm in index funds for TKIPS and money markets and losing 7% to inflation. We got rid of all debt. I'm retired and I sleep well at night. I don't have confidence that The Fed will be able to make the financial markets right because it no longer has the means. There's nothing wrong with a good S&P 500 index fund. After the "imminent" market correction I will be a Boglehead once again.

  Post: Weighty Issue

  Link to comment from January 9, 2022